Boston, MA 04/03/2013 (wallstreetpr) – The mortgage market is the U.S is in the process of recovering from a foreclosure crisis and now its Mexico’s turn. The state-backed lender, Infonavit who is responsible for close to 70 percent of the home loans in Mexico said that there was a 100% increase in repossession of homes from last year. In most places, land that is beyond city limits tends to be inexpensive. This factor is used by many builders to construct buildings that cater to a segment of the market that find city real-estate prices way beyond their reach.
The hidden cost of traveling to their workplaces in the city is something that probably comes into the picture only after they move into their sub-urban homes. In most cases this can prove to be prohibitively high and eventually drive people back into the cities leaving in their wake empty houses and unpaid mortgages. This has proved to be a huge strain on the home-building industries as well as companies that provide home loans. In some cases, Infonavit has moved into action and seized homes. They have been relying on the unpaid taxes quotient rather than the delinquent loan one. This has helped them bring the transaction time down from two years to four months.
Commuting takes its toll
Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA) (current: $8.61, down by 1.35%) is facing an issue of mammoth proportions as a large percentage of homes are unoccupied. As population in the cities increased and older properties went into a state of disrepair, builders thought that they had finally found the secret to profitability in the home construction business by building homes in the suburbs. Little did they realize that the minute the stress and the cost of the daily commute became too difficult to handle, people would move right back into the cities and leave behind unpaid mortgages.
No safety in the construction business
The Mexican building community thought that it was safeguarded by the fact that the housing industry was largely a government-backed one and did not anticipate this downtrend. The outcome of this is going to be that some builders will suffer heavy losses while others might have to shut down completely. Overall, the country is in expansion mode and Mexico is expected to grow this year by 3.5 percent in comparison to the biggest economy in the region, Brazil which is expected to grow by 3.1 percent. America which was in the throes of a housing meltdown is slowly rearing its head though a little cautiously and is projected to grow by 1.9 percent
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